Exhibit 4.1
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FirstEnergy Corp.
and
The Bank of New York,
Rights Agent
Rights Agreement
Dated as of November 18, 1997
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent; Corporate Authority 4
Section 3. Issue of Right Certificates 4
Section 4. Form of Right Certificates 7
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange
of Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates. 9
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. 10
Section 8. Cancellation of Right Certificates. 13
Section 9. Reservation and Availability of Shares. 14
Section 10. Record Date for Shares. 15
Section 11. Adjustment of Purchase Price,
Number of Shares or Number of Rights. 16
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. 28
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. 28
Section 14. Fractional Rights and Fractional Shares. 30
Section 15. Rights of Action. 31
Section 16. Agreement of Right Holders. 32
Section 17. Right Certificate Holder Not Deemed a
Shareholder. 33
Section 18. Concerning the Rights Agent. 33
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. 34
Section 20. Duties of Rights Agent. 36
Section 21. Change of Rights Agent. 39
Section 22. Issuance of New Right Certificates. 40
Section 23. Redemption. 40
Section 24. Exchange. 42
Section 25. Notice of Certain Events. 44
Section 26. Notices. 45
Section 27. Supplements and Amendments. 45
Section 28. Successors. 46
Section 29. Benefits of this Agreement. 46
Section 30. Severability. 47
Section 31. Governing Law. 47
Section 32. Counterparts. 47
Section 33. Descriptive Headings. 47
Section 34. Determinations and Actions by the Board of
Directors, etc. 48
Signatures
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Shares
RIGHTS AGREEMENT
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In accordance with the Ohio Business Corporation Law, the
Board of Directors of FirstEnergy Corp. (the "Company") has
authorized and declared a dividend of one share purchase right (a
"Right") for each Share (as hereinafter defined) of the Company
outstanding on November 28, 1997 (the "Record Date"), each Right
representing the right to purchase one additional Share, upon the
terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with
respect to each Share of the Company that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).
Section 1. Certain Definitions
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For purposes of this Agreement, the following terms have the
meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Shares then
outstanding, but shall not include the Company, any Subsidiary
(as such term is hereinafter defined) of the Company or any
employee benefit plan of the Company or any Subsidiary of the
Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934
(the "Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a
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Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
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Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso
to Section 1(c)(ii)(B)) or disposing of any securities of the
Company.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in the
State of Ohio are authorized or obligated by law or executive
order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., New York City, time, on such date; provided, however, that
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if such date is not a Business Day it shall mean 5:00 P.M., New
York City time, on the next succeeding Business Day.
(f) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(g) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(h) "Person" shall mean any individual, firm, partnership,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(i) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(j) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Shares" when used with reference to the Company shall
mean the shares of Common Stock, par value $0.10 per share, of
the Company. "Shares" when used with reference to any Person
other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person, or
the equity securities or other equity interest having power to
control or direct the management of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(l) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(m) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
(n) "Triggering Event" shall mean any event described in
Section 11(a)(ii)(A), (B) and (C) and Section 13 hereof.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board of Directors of the Company
in its good faith judgment, which determination shall be binding
on the Rights Agent.
Section 2. Appointment of Rights Agent; Corporate Authority.
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The Company hereby appoints the Rights Agent to act as agent
for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable provided that the
respective duties of the Rights Agent and any such co-Rights
Agents are clearly set forth in a written agreement signed by the
Company, the Rights Agent and any such co-Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any such co-Rights
Agent.
The Company represents and warrants that the issuance of the
Rights, the execution of the Rights Agreement and the appointment
of The Bank of New York, as Rights Agent have been validly
authorized by all necessary corporate action on the part of the
Company.
Section 3.Issue of Right Certificates.
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(a) Until the earlier of (i) the Close of Business on the
tenth day after the Shares Acquisition Date or (ii) the Close of
Business on the tenth day after the date of the commencement of,
or first public announcement of the intent to commence, a tender
or exchange offer by any Person (other than the Company, any
Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) for 25% or more of the
outstanding Shares (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights;
the Close of Business on the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by
the certificates for Shares of the Company registered in the
names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of such
Shares. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and
the Rights Agents will, if requested, send at the Company's
expense) by first-class, postage-prepaid mail, to each record
holder of Shares of the Company as of the Close of Business on
the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the
form of Exhibit A hereto (a "Right Certificate"), evidencing one
Right for each Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Shares, in substantially the form of Exhibit B hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of Shares of the Company as of the Close of
Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for
Shares of the Company outstanding as of the Record Date, until
the Distribution Date (or, if earlier, the earlier of the
Redemption Date or Final Expiration Date), the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or, if earlier,
the earlier of the Redemption Date or Final Expiration Date), the
surrender for transfer of any certificate for Shares of the
Company outstanding on the Record Date, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Shares represented
thereby.
(c) Certificates for Shares of the Company which become
outstanding (including, without limitation, reacquired Shares
referred to in the last sentence of this paragraph (c)) after the
Record Date but prior to the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between FirstEnergy Corp. and The Bank of New York, dated as of
November 18, 1997 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of FirstEnergy
Corp. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. FirstEnergy
Corp. will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person, including Affiliates or
Associates thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person
or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Shares represented by such certificates shall be evidenced by
such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights
associated with the Shares represented thereby. In the event
that the Company purchases or acquires any of its Shares after
the Record Date but prior to the Distribution Date, any Rights
associated with such Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights
associated with the Shares which are no longer outstanding.
Section 4. Form of Right Certificates.
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(a) The Right Certificates (and the form of election to
purchase Shares and the form of assignment to be printed on the reverse
thereof) shall be substantially the same as Exhibit A hereto and
may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 22
hereof, the Right Certificates shall entitle the holders thereof
to purchase such number of Shares as shall be set forth therein
at the price per Share set forth therein (the "Purchase Price"),
but the number of such Shares and the Purchase Price shall be
subject to adjustment as provided herein.
(b) (1) Any Right Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights beneficially
owned by: (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and (2) any Right Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
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The Right Certificates shall be executed on behalf of the
Company by its President, an Executive Vice President or a Senior
Vice President, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by its Secretary or Assistant Secretary,
either manually or by facsimile signature. The Right
Certificates shall be countersigned, either manually or by
facsimile signature, by the Rights Agent and shall not be valid
for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificates may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such
an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its designated office, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right
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Certificates.
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Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a
like number of Shares as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the designated
office of the Rights Agent, at 000 Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx
Xxxx, Xxx Xxxx. Thereupon the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right
Certificates. In no event shall the Rights Agent be responsible
for the payment of any such tax or charge.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
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of Rights.
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(a) The registered holder of any Right Certificate may
exercise, except as such right of exercise may be suspended
pursuant to Section 9(b) and 11(a)(iii) hereof, the Rights
evidenced thereby (except as otherwise provided therein) in whole
or in part at any time after the Distribution Date upon surrender
of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at
the designated office of the Rights Agent, at 000 Xxxxxxx Xxxxxx,
Xxxxx 00X, Xxx Xxxx, Xxx Xxxx, together with payment of the
Purchase Price for each Share as to which the Rights are
exercised, at or prior to the earliest of (i) the close of
business on November 28, 2007 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date") or (iii) the time at which the
Rights are exchanged as provided in Section 24 hereof.
(b) exercise of a Right shall initially be $70.00, shall be
subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a certificate from an appropriate
officer of the Company stating that the Company has received all
necessary regulatory approvals, upon receipt of a Right
Certificate representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by payment of the
aggregate Purchase Price for the Shares to be purchased and an
amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with
Section 9 hereof in cash, or by certified check or cashier's
check payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent (or
from the Company, if the Company is acting as its own transfer
agent) the Shares certificates for the number of Shares to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to
be paid in lieu of issuance of fractional Shares in accordance
with Section 14 hereof, (iii) when appropriate, requisition from
the Company the amount of cash, property or securities to be paid
in lieu of Shares in accordance with Section 11(a)(iii) hereof,
(iv), after receipt of such certificates, cause the same to be
delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder, and (v) when appropriate, after
receipt, deliver such cash, property or securities to or upon the
order of the registered holder of such Right Certificate. The
payment of the Purchase Price may be made (x) in cash or by
certified bank check or bank draft payable to the order of the
Company, or (y) by delivery of a certificate or certificates
(with appropriate stock powers executed in blank attached
thereto) evidencing a number of Shares of the Company equal to
the then Purchase Price divided by the closing price (as
determined pursuant to Section 11(d) hereof) per share of Shares
at the Close of Business on the Business Day immediately
preceding the date of such exercise. In the event that the
Company is obligated to issue other securities (including Shares)
of the Company, pay cash and/or distribute other property
pursuant to Section 11(a)(iii) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights
Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, any Rights that are or were at any time on or after the
earlier of the Distribution Date and the Shares Acquisition Date
(i) beneficially owned by an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) transferred by an
Acquiring Person (or any such Associate or Affiliate) after the
Acquiring Person becomes such, or (iii) transferred by an
Acquiring Person (or any such Associate or Affiliate) prior to or
concurrently with the Acquiring Person becoming such and if the
transferee receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any
Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall, from and after the first
occurrence of any event described in Section 11(a)(ii)(A), (B) or
(C) or the first sentence of Section 13, become null and void
without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but
neither the Company nor the Rights Agent shall have any liability
to any holder of Right Certificates or any other Person as a
result of its failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder of a Right Certificate upon the occurrence of any
purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set
forth on the reverse side of the Right Certificate surrendered
for such exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation of Right Certificates.
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All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by the provisions of this Rights Agreement.
The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Shares.
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(a) The Company covenants and agrees that, as soon as
practicable following the first occurrence of an event referred
to in Section 11(a)(ii)(A), (B) and (C) and in the first sentence
of Section 13, it will take all such action as may be necessary
(except as otherwise provided in Section 11(a)(iii) hereof) to
cause to be reserved and kept available out of its authorized and
unissued Shares or any Shares held in its treasury, the number of
Shares that will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) The Company shall use its best efforts, as soon as
practicable following the first occurrence of an event referred
to in Section 11(a)(ii)(A), (B) and (C) and in the first sentence
of Section 13, to (i) file a registration statement under the
Securities Act of 1933 (the "Act"), with respect to the Rights
and the Shares purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act)
until the earlier of the Redemption Date or the Final Expiration
Date. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. The
Company may temporarily suspend, for a period of time not to
exceed ninety (90) days, the exercisability of the Rights in
order to prepare and file such registration statement. Upon any
such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Shares
delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable Shares, except as otherwise provided
in Section 11(a)(iii).
(d) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any Shares upon the
exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other
than, or the issuance or delivery of certificates for the Shares
in a name other than that of, the registered holder of the Right
Certificate surrendered for exercise or to issue or to deliver
any certificates for Shares upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Record Date for Shares.
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Each person in whose name any certificate for Shares is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Shares
represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if
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the date of such surrender and payment is a date upon which the
stock transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such Shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the stock transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a holder
of Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
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Number of Rights.
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The Purchase Price, the number of Shares covered by each
Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Shares
of the Company payable in Shares, (B) subdivide its outstanding
Shares, (C) combine its outstanding Shares into a smaller number
of Shares or (D) issue any shares of its capital stock in a
reclassification of the Shares (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Company
shall proportionally adjust the Purchase Price in effect at the
time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such
date, so that the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the stock
transfer books of the Company were open, he would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made
prior to any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 hereof, in the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of
this Agreement, directly or indirectly, (1) shall merge into the
Company or otherwise combine with the Company or any of its
Subsidiaries, and the Company or such Subsidiary shall be the
continuing or surviving corporation of such merger or
consolidation, and the Shares of the Company shall remain
outstanding and unchanged, or (2) shall, in one or more
transactions, transfer any assets to the Company in exchange (in
whole or in part) for Shares or for securities exercisable for or
convertible into Shares of the Company or otherwise obtain from
the Company, with or without consideration, any additional Shares
of the Company or other securities exercisable for or convertible
into Shares of the Company (other than as a part of a pro rata
distribution to all holders of such securities), or (3) shall
sell, purchase, lease, exchange, acquire, mortgage, pledge,
transfer or otherwise dispose of (in one transaction or a series
of transactions), to, from or with the Company or any of the
Company's Subsidiaries, other than incidental to the lines of
business currently engaged in as of the date hereof between the
Company and its Subsidiaries taken as a whole and such Acquiring
Person or Associate or Affiliate, assets, or an interest therein,
having an aggregate fair market value of more than $1 million, or
(4) shall sell, purchase, lease, exchange, mortgage, acquire,
pledge, transfer or otherwise dispose of (in one transaction or a
series of transactions), to, from or with the Company or any of
the Company's Subsidiaries, assets or an interest therein on
terms and conditions less favorable to the Company than the
Company would be able to obtain through arm's-length negotiation
with an unaffiliated third party, or (5) shall receive any
compensation from the Company or any of the Company's
Subsidiaries other than compensation for full-time employment as
a regular employee at rates in accordance with the Company's (or
its Subsidiaries') past practices, or (6) shall receive the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries, or
(B) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions
(whether or not with or into or otherwise involving an Acquiring
Person) which has the effect, directly or indirectly, of
increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity or convertible
securities of the Company or any of its Subsidiaries which is
directly or indirectly owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, or
(C) any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any entity or Person organized,
appointed or established pursuant to the terms of any such plan),
alone or together with its Affiliates and Associates, shall at
any time after the date of this Agreement be the Beneficial Owner
of 25% or more of the Shares of the Company then outstanding,
other than pursuant to any transaction set forth in Section 13
hereof, or an acquisition of Shares of the Company pursuant to a
tender offer or exchange offer for all outstanding Shares of the
Company at a price and on terms determined by at least a majority
of the members of the Board of Directors who are not officers of
the Company and who are not nominees or representatives of, or
otherwise affiliated with, an Acquiring Person, after receiving
advice from one or more investment banking firms, to be (a) at a
price which is fair to stockholders (taking into account all
factors which such members of the Board deem relevant including,
without limitation, prices which could reasonably be achieved if
the Company or its assets were sold on an orderly basis designed
to realize maximum value) and (b) otherwise in the best interests
of the Company, its stockholders and the economy of the State of
Ohio and the United States of America and not adverse to the
interests of the Company's employees, suppliers, creditors or
customers or to that of the community or society in general,
then, and in each such case, the Company shall make proper
provision so that each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive
(subject to Section 11(a)(iii) hereof), upon exercise thereof at
the then current Purchase Price in accordance with the terms of
this Agreement, such number of Shares of the Company as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the number of Shares and dividing that product
by (y) 50% of the current per share market price of the Shares
(determined pursuant to Section 11(d)) on the date of the
occurrence of any one of the events listed above in this
subparagraph (ii).
(iii) In the event that there shall not be sufficient
authorized but unissued Shares and authorized and issued Shares
held in the treasury and not reserved for other purposes to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall take all such
action as may be necessary to authorize additional Shares for
issuance upon exercise of the Rights; provided, however, that if
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the Company is unable to, or for any reason does not promptly,
cause the authorization of a sufficient number of additional
Shares, or is unable for any reason to issue Shares upon the
exercise of the Rights, then, in the event the Rights become
exercisable as provided in Section 7(a), the Company, with
respect to each Right and to the extent necessary under and
permitted by applicable law and any agreements or instruments in
effect on the Distribution Date to which it is a party, shall
make adequate provision to substitute for that number of the
Shares as to which additional Shares have not been authorized for
issuance or as to which it is constrained from issuing: (A) an
amount in cash equal to the excess of (1) the product of (x) the
number of Shares, multiplied by (y) the current market price
(determined pursuant to Section 11(d)) per Share on the date on
which the applicable event set forth in Section 11(a)(ii)(A),
(B), or (C) occurs (such product being hereinafter referred to as
the "Current Value"), over (2) the Purchase Price, in lieu of
issuing Shares and requiring payment therefor, (B) debt or equity
securities (other than Shares) having a value equal to the
Current Value, where the value of such securities shall be
determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company, and requiring
the payment of the Purchase Price, or (C) any combination of
cash, property, common share equivalents (securities having the
same value as the Shares) and/or other securities having the
requisite value pursuant to Section 11 as determined by a
nationally recognized investment banking firm selected by the
Board of Directors of the Company and requiring the payment of
all or any requisite portion of the Purchase Price; provided
--------
further, however, that if the Company shall not have made
------- -------
adequate provision to deliver value pursuant to clause (A), (B)
or (C) above within 60 days following the date of the occurrence
of the applicable event listed in Section 11(a)(ii)(A), (B) or
(C), then the Company, as liquidated damages and in complete
satisfaction of all claims and liabilities that may arise in
favor of the holders of the Rights as a result of not having made
such adequate provision, shall be obligated to deliver cash in
accordance with clause (A) above. To the extent that the Company
determines that some action need be taken pursuant to clause (A),
(B) or (C) of the first proviso to the first sentence of this
Section 11(a)(iii), the Company may suspend the exercisability of
the Rights for a period of up to 60 days following the date of
the occurrence of the applicable event listed in Section
11(a)(ii)(A), (B) or (C), in order to decide the appropriate form
of distribution to be made pursuant to such first proviso and to
determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily
suspended.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of its
Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Shares
or securities convertible into Shares at a price per Share (or
having a conversion price per share, if a security convertible
into Shares) less than the then current per share market price of
the Shares of the Company (as defined in Section 11(d)) on such
record date, the Company shall determine the Purchase Price to be
in effect after such record date by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Shares of
the Company outstanding on such record date plus the number of
Shares which the aggregate offering price of the total number of
Shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of
which shall be the number of Shares of the Company outstanding on
such record date plus the number of additional Shares to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent. Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights or warrants are not so issued, the Company shall adjust
the Purchase Price to be the Purchase Price which would have been
in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of its Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend in an amount not
exceeding 125 percent of the next previous regular quarterly cash
dividend or a dividend payable in Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b)), the
Company shall determine the Purchase Price to be in effect after
such record date be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market
price of the Shares of the Company (as defined in Section 11(d))
on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Share and the denominator of which
shall be such current per share market price of the Shares. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Company shall adjust the Purchase Price again to be the
Purchase Price which would have been in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security"
for the purpose of this Section 11(d)) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; provided,
--------
however, that in the event that the current per share market
-------
price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in
each such case, the Company shall adjust the current per share
market price appropriately to reflect the current market price
per share equivalent of such Security. The closing price for
each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading
or, if the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations Systems
("NASDAQ") or such other similar system as may then be in use,
or, if on any such date the Security is not quoted by any such
system, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If
no such market maker is making a market in the Security, "current
per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
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that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one ten-thousand of a Share or any other share or
security, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or
(ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the
Company other than Shares, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect
to the Shares contained in Section 11(a) through (c), (h) and
(i), and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of Shares or other capital stock or securities
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Section 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
Shares (calculated to the nearest one ten-thousand of a Share)
obtained by (i) multiplying (x) the number of Shares covered by a
Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of Shares
purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall
be exercisable for the number of Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousand) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights indicating the record
date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. Such record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but
if the Right Certificates have been issued, shall be at least 10
days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record specified
in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Shares issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number
of Shares which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value,
if any, of the Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Shares at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the
Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Shares and
other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
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Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive
such additional Shares or other capital stock or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the
Shares, issuance wholly for cash of any Shares at less than the
current market price, issuance wholly for cash of Shares or
securities which by their terms are convertible into or
exchangeable for Shares, dividends on Shares payable in Shares or
issuance of rights, options or warrants referred to hereinabove
in Section 11(b), hereafter made by the Company to holders of its
Shares shall not be taxable to such holders.
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares.
------
Whenever an adjustment is made as provided in Section 11 and
13 hereof, the Company shall promptly (a) prepare a certificate
setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent
and with each transfer agent for the Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate (or, if prior to the Distribution Date, to
each holder of Shares of the Company) in accordance with Section
26 hereof. The Rights Agent shall be fully protected in relying
on any certificate prepared by Company pursuant to Sections 11,
12 and 13 hereof and on any adjustment described therein.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
---------------------------------------------------
or Earning Power.
----------------
In the event, following the Shares Acquisition Date,
directly or indirectly, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part
of the Shares shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or
any other property, or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person other than the Company or one or more of its
wholly owned Subsidiaries, then, and in each such case, the
Company or such other Person, as the case may be, shall make
proper provision so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof in accordance with the terms
of this Agreement, such number of Shares of such other Person
(including the Company as successor thereto or as the surviving
corporation) as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of
Shares of the Company for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share
market price of the Shares of such other Person (determined
pursuant to Section 11(d)) on the date of consummation of such
consolidation, merger, sale or transfer (such number of shares to
be appropriately adjusted in a manner analogous to the applicable
adjustment to the Purchase Price provided for in Section 11 in
the event that during the two-year period after such date of
consummation or occurrence an event of a type analogous to any of
the events described in Section 11 hereof shall have occurred
with respect to such Shares); (ii) the issuer of such Shares
shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such
issuer; and (iv) such issuer shall take such steps (including,
but not limited to, the reservation of a sufficient number of its
Shares in accordance with Section 9 hereof) in connection with
such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Shares thereafter
deliverable upon the exercise of the Rights. The Company shall
not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation
of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The Company
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental
agreement providing that the requirements of this Section 13
shall be promptly performed in accordance with their terms and
that such consolidation, merger, sale or transfer shall not
result in a default by the Company or such issuer under this
Rights Agreement as the same shall have been assumed by such
issuer pursuant to this Section 13. The provisions of this
Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14.Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by NASDAQ or such other similar
system as may then be in use or, if on any such date the Rights
are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board
of Directors of the Company. If on any such date no such market
maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Shares upon exercise of the Rights or to distribute certificates
which evidence fractional Shares. In lieu of fractional Shares,
the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Share. For purposes of this Section
14(b), the current market value of a Share shall be the closing
price of a Share (as determined pursuant to the second sentence
of Section 11(d) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional Shares upon exercise of a Right.
Section 15. Rights of Action.
-----------------
All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent under Section 18
hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the
registered holders of the Shares of the Company); and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Shares of the Company), without the
consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Shares of
the Company), may, in his own behalf and for his own benefit,
enforce, institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of, and injunctive relief
against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
--------------------------
Every holder of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Shares;
(b) after the Distribution Date, the Right Certificates
will be transferable only on the registry books of the Rights
Agent if surrendered at the designated office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of
transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Shares
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Rights Agreement to
the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or to any other Person as
a result of its inability to perform any of its obligations under
this Rights Agreement by reason of any preliminary or permanent
injunction or by other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining
performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
--------------------------------------------------
No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the Shares or any other securities of the Company
which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in
any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
---------------------------
The Company agrees to pay to the Rights Agent such
compensation as shall be agreed in writing between the Company
and the Rights Agent for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its
reasonable expenses, counsel fees and disbursements and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for the Shares of the Company or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20
hereof.
The Rights Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Rights
Agreement, and no implied covenants or obligations shall be read
into this Rights Agreement against the Rights Agent.
The provisions of this Section shall survive the termination of
this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
------
Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to all or substantially all
the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the counter-signature of
the predecessor Rights Agent and deliver such Right Certificates
so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in
the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its
selection (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, including,
without limitation, any calculations required to be made
hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by
any one of the President, the Executive Vice President, any
Senior Vice President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates or be required to verify
the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of written notice
from the Company that such change or adjustment is required); nor
shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Shares to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Shares will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instrument and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the
President, any Executive Vice President, any Senior Vice
President, any Vice President, the Secretary or the Treasurer of
the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be
liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection of such attorney or agent.
(j) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
contained in the form of assignment or the form of election to
purchase set forth on the reverse thereof, as the case may be,
has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise
of transfer without first consulting with the Company.
(k) No provisions of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 30
days' notice in writing mailed to the Company and to each
transfer agent of the Shares by registered or certified mail. The
Company may remove the Rights Agent or any successor Rights Agent
upon 30 days notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer
agent of the Shares by registered or certified mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then
the Rights Agent or registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a)
a corporation, organized and doing business under the law of the
United States or of any state of the United States, in good
standing, having an office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and
is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million or
(b) an Affiliate controlled by a corporation described in clause
(a) of this sentence. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the
Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23 .Redemption.
----------
(a) The Board of Directors of the Company may, at its
option, at any time prior to 5:00 P.M., Akron, Ohio time, on the
earlier of (i) the Close of Business on the tenth day following
the Shares Acquisition Date (or such later date as the Board of
Directors then in office may determine), or (ii) the Final
Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right, as
such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to
as the "Redemption Price"); provided, however, that if, following
-------- -------
the occurrence of a Shares Acquisition Date and following the
expiration of the right of redemption hereunder but prior to any
event referred to in Section 11(a)(ii)(A), (B) or (C) or in the
first sentence of Section 13, each of the following shall have
occurred and remain in effect: (i) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number
of Shares in a transaction, or series of transactions, which did
not result in the occurrence of an event referred to in Section
11(a)(ii)(A), (B) or (C) or in the first sentence of Section 13,
such that such Person is thereafter a Beneficial Owner of less
than 15% of the Shares, (ii) there are no other Persons,
immediately following the occurrence of the event described in
clause (i), who are Acquiring Persons, and (iii) the transfer or
other disposition described in clause (i) above was other than
pursuant to a transaction, or series of transactions, which
directly or indirectly involved the Company or any of its
Subsidiaries; then the right of redemption shall be reinstated
and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section
11(a)(ii) prior to the expiration of the Company's right of
redemption hereunder. In calculating the Redemption Price
payable to any particular holder of the Rights being redeemed,
the Company shall round the total amount payable to such holder
pursuant to the provisions of the first sentence of this Section
23(a) up to the nearest $.01. Anything to the contrary herein
contained notwithstanding, no payment shall be made to any holder
of Rights being redeemed if such payment would be less than $1.00
unless such holder expressly requests such payment. The failure
to make any such payment of less than $1.00 in the absence of a
request therefor shall not affect the redemption of the Rights
involved.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, and without
any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
Within 10 days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24, and
other than in connection with the purchase of Shares prior to the
Distribution Date.
Section 24. Exchange.
--------
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for Shares at
an exchange ratio of one Share per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
--------------
Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or
any entity holding Shares for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of such
person, becomes the Beneficial Owner of 50% or more of the Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Shares equal to the
number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of
such exchange; provided, however, that the failure to give, or
-------- -------
any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights
Agent or prior to the Distribution Date on the registry books of
the transfer agent for the Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Shares for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient Shares
issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be
necessary to authorize additional Shares for issuance upon
exchange of the Rights.
(d) The Company shall not be required to issue fractions of
Shares or to distribute certificates which evidence fractional
Shares. In lieu of such fractional Shares, the Company shall pay
to the registered holders of the Right Certificates, with regard
to which such fractional Shares would otherwise be issuable, an
amount in cash equal to the same fraction of the current market
value of a whole Share. For the purposes of this subsection (e),
the current market value of a whole Share shall be the closing
price of a Share (as determined pursuant to the second sentence
of Section 11(d) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
-------------------------
In case the Company shall propose (a) to pay any dividend
payable in stock of any class to the holders of the Shares or to
make any other distribution to the holders of the Shares (other
than a regular quarterly cash dividend in an amount not exceeding
125 percent of the next previous regular quarterly cash dividend)
or (b) to offer to the holders of the Shares rights or warrants
to subscribe for or to purchase any additional Shares or shares
of stock of any class or any other securities, rights or options,
or (c) to effect any reclassification of the Shares (other than a
reclassification involving only the subdivision of outstanding
Shares), or (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least 20 days prior
to the record date for determining holders of the Shares for
purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of the Shares, whichever shall be the earlier.
Section 26. Notices.
--------
Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent)
as follows:
FirstEnergy Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxxx Xxxxxxxx
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments.
---------------------------
The Company and the Rights Agent may from time to time
supplement or amend this Agreement without the approval of any
holders of Shares or Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions in regard to
matters or questions arising hereunder, which the Company and the
Rights Agent may deem necessary or desirable, including but not
limited to the extension of the redemption period referred to in
Section 23 (provided that such period may not be extended after
it has expired), and provided that after the Distribution Date
any such amendment shall not otherwise adversely affect the
interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person) and provided further that no such supplement or amendment
shall be effective unless made in writing and signed by the
Company and the Rights Agent. The Rights Agent shall not execute
any proposed amendment or supplement until it has received a
certificate from an appropriate officer of the Company stating
that such proposed amendment or supplement is in compliance with
this Section 27. Notwithstanding any other provision hereof, the
Rights Agent's consent must be obtained regarding any amendment
or supplement pursuant to this Section 27 which alters the Rights
Agents rights or duties.
Section 28. Successors.
-----------
All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Shares of the Company) any legal or
equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Shares of
the Company).
Section 30. Severability.
------------
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding
-------- -------
anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment
that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the Close of Business on
the tenth day following the date of such determination by the
Board of Directors.
Section 31. Governing Law.
-------------
This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the law of the State
of Ohio and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State provided that
the rights and obligations of the Rights Agent shall be governed
by the laws of the State of New York (or state of incorporation
of any successor Rights Agent).
Section 32. Counterparts.
------------
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33. Descriptive Headings.
---------------------
Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions
hereof.
Section 34. Determinations and Actions by the Board of
------------------------------------------
Directors, etc.
----------------
For all purposes of this Agreement, any calculation of the number
of Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding Shares of the Company of which any Person is the
Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(l)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of
the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power (i) to
interpret the provisions of this Agreement, and (ii) to make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or not to redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above
written.
FIRSTENERGY CORP.
By:_________________________
Name:
Title:
The Bank of New York
By:_________________________
Name:
Title:
Exhibit A
Form of Right Certificate
FirstEnergy Corp.
Certificate No. R- Rights
NOT EXERCISABLE AFTER THE EARLIEST OF (1), ______,_____,
2) REDEMPTION AND (3) EXCHANGE. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT
Right Certificate
This certifies that _________________, or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement,
dated as of November 18, 1997 (the "Rights Agreement"), between
FirstEnergy Corp., an Ohio corporation (the "Company"), and The
Bank of New York (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., New York
City time, on ____________,____________ at the designated office
of the Rights Agent, or at the office of its successor as Rights
Agent, one fully paid, nonassessable share of Common Stock, par
value $0.10 per share (a "Share"), of the Company, at a purchase
price of $70 per Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by
this Right Certificate (and the number of Shares which may be
purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
____________, based on the Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the
number of Shares which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of the rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the above-
mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at either the designated office of
the Rights Agent, 000 Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx Xxxx, Xxx
Xxxx, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of Shares as the
Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be required to be
exchanged for Shares on a one for one basis, as adjusted pursuant
to the provisions of the Rights Agreement, or may, but are not
required to, be redeemed by the Company at a redemption price of
$.001 per Right. The amount so payable shall be rounded up to
the nearest $.01 but no payment of less than $1.00 shall be sent
unless expressly requested by the holder hereof.
No fractional Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the
Shares which may at any time be issuable on the exercise hereof,
or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the
Company of any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated: _______________, ____ .
ATTEST: FIRSTENERGY CORP.
______________________________ By: ___________________________
Name:
Title:
Countersigned:
By: ___________________________
Name:
Title:
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________ hereby
sells, assigns and transfer unto ___________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________________________ Attorney, to
transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: _________________, ____
_____________________________
Signature
Form of Reverse Side of Right Certificate continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the rights
represented by the Right Certificate.)
To FirstEnergy Corp.:
The undersigned hereby irrevocably elects to exercise
__________________________________ Rights represented by this Right
Certificate to purchase the Shares issuable upon the exercise of
such Rights and requests that certificates for such Shares be
issued in the name of:
Please insert social
security or other
identifying number
_________________________________________________________________
(Please print name and address)
__________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social
security or other
identifying number
_________________________________________________________________
(Please print name and address)
__________________________________________________________________
Dated: ______________________, ____
_________________________
Signature
Form of Reverse Side of Right Certificate continued
NOTICE
------
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate _________
are _________ are not being exercised by or on behalf of a Person
who is or was an Acquiring Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it _________ did _________ did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________, ____
____________________________
Signature
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE SHARES
On November 18, 1997 FirstEnergy Corp. (the "Company")
authorized assignment of one share purchase right (a "Right") for
each outstanding share of Common Stock, par value $0.10 per share
(the "Shares"), of the Company. The Rights will be assigned on
November 28, 1997 (the "Record Date") to the shareholders of
record on that date. Each Right entitles the registered holder
to purchase from the Company one Share at a price of $70 per
Share (the "Purchase Price"), when the Rights become exercisable.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The
Bank of New York, as rights agent (the "Rights Agent").
Rights initially not separable from Common Stock: The
Rights will be evidenced, with respect to any of the Share
certificates outstanding as of the Record Date, by such Share
certificate until the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the
outstanding Shares (the date of such public announcement being
called the "Share Acquisition Date") or (ii) 10 days following
the commencement or announcement of an intention to make a tender
offer or exchange offer by a person other than the Company if,
upon consummation of the offer, such person, together with
persons affiliated or associated with it, would be the beneficial
owner of 25% or more of the outstanding Shares (the earlier of
such days being called the "Distribution Date"). The Rights
Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Shares. Until the
Distribution Date (or earlier redemption, termination or
expiration of the Rights), new Share certificates issued after
the Record Date, upon transfer or new issuance of Shares, will
contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption,
termination or expiration of the Rights), the surrender for
transfer of any certificates for Shares, outstanding as of the
Record Date, even without such notation, will also constitute the
transfer of the Rights associated with the Shares represented by
such certificate.
Separation of Rights from Common Stock: As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Shares as of the close of
business on the Distribution Date and such separate Right
Certificates alone will thereafter evidence the Rights.
Exercise of Rights: The Rights are not exercisable until
the Distribution Date. The Rights will expire November 28, 2007
unless such date is extended or unless the Rights are earlier
redeemed by the Company or exchanged for Shares, in each case as
described below.
The Purchase Price payable, and the number of Shares or
other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Shares, (ii)
upon the grant to holders of the Shares of certain rights or
warrants to subscribe for or purchase Shares at a price, or
securities convertible into Shares with a conversion price, less
than the then current market price of the Shares or (iii) upon
the distribution to holders of the Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in
Shares) or of subscription rights or warrants (other than those
referred to above).
In the event that (i) the Company merges with or is involved
in another business combination transaction with an Acquiring
Person, (ii) 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, (iii) an Acquiring Person
acquires 25% or more of the Shares, or (iv) an Acquiring Person
engages in one or more self-dealing transactions with the
Company, then, proper provision will be made so that each holder
of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right,
that number of shares of common stock of the Company or of the
acquiring company, as the case may be, which at the time of such
transaction will have a value double the amount of the Purchase
Price.
Any Rights that are or were beneficially owned at any time
on or after the Distribution Date by an Acquiring Person shall
become null and void upon the occurrence of any event described
in the preceding paragraph and no holder of such Rights shall
have any right with respect to such Rights from and after the
occurrence of any such event.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Shares will be issued and in lieu thereof, an adjustment in cash
will be made based on the market price of the Shares on the last
trading day prior to the date of exercise.
Redemption of the Rights: At any time prior to the 10th day
following the Shares Acquisition Date (unless extended by the
Company), the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.001 per Right
(the "Redemption Price"). In that connection, the amount payable
to any holder of the Rights will be rounded up to the nearest
$.01. Payments of less than $1.00 will be sent to holders of the
Rights only if the particular holder entitled to the payment
specifically requests that the payment be sent. Immediately upon
the action of the Company ordering redemption of the Rights, the
right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Exchange of Rights: After the Distribution Date and prior
to the time an Acquiring Person has acquired 50% or more of the
then outstanding Shares, the Company may require that some or all
of the Rights be exchanged on a one for one basis (subject to
adjustment for stock splits, stock dividends and other similar
transactions) for Shares. To the extent that Rights are required
to be exchanged for Shares, the right to exercise those Rights
will terminate and the only right of the holder thereof will be
to exchange those Rights for Shares.
Amendments: The terms of the Rights may be amended by the
Company without the consent of the holders of the Rights,
including an amendment to extend the period during which the
rights may be redeemed, except, that after the Distribution Date
no such amendment may otherwise adversely affect the interests of
the holders of the Rights. In the event an Acquiring Person,
after triggering the redemption option of the Company, reduces
its shareholdings to less than 15% then the redemption rights are
reinstated.
No Rights as a Shareholder: Until a Right is exercised, the
holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or
to receive dividends.
----------------------
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Current
Report on Form 8-K dated December 1, 1997. A copy of the Rights
Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
